Exports to Europe rise despite crisis
Exports to Britain, Germany, the Netherlands and Italy rose 18% in the three months to October.
Friday, November 25 2011 || News || BY James Weir, Businessday.co.nz
Latest trade figures show exports to Europe up 18 per cent in the past three months compared with the same period last year, double the growth of sales to Asia and even stronger than export growth to China.
New Zealand's exports in October alone were up 5.3 per cent to $3.9 billion, compared with the same month last year.
The monthly trade deficit was $282 million, but that was smaller than expected. The annual trade balance was $627m for the year to October.
The dive in the kiwi from a peak of US89c in August to US74c yesterday is providing a buffer for exports, but ANZ economists expected the annual trade balance to worsen because of a "decidedly weaker" global outlook.
Bank of New Zealand economist Doug Steel said the export growth to Europe was "perhaps hard to believe" given the recent bad press and economic and financial problems in Europe.
For example, exports to Britain in the past three months were up 15 per cent on a year ago to more than $320m. Sales to Germany rose more than 24 per cent, and even to Italy, one of the "sick men of Europe", sales were up more than 30 per cent in the three months.
"Based on New Zealand's trade figures you would be excused for thinking Europe was a hive of activity," Steel said.
Though New Zealand was not immune to Europe's problems, the strong export growth showed people should be careful not to generalise too much about the potential direct trade impact from Europe's problems, he said.
By category, meat exports to all countries were up almost 30 per cent in the three months till October, compared with a year before.
In the same period, the biggest export category, dairy products such as milk powder, butter and cheese, actually fell slightly, with international prices easing from recent peaks.
In October alone, dairy product exports were down 7 per cent on the same month last year, but monthly figures can move around sharply.
HSBC Bank chief economist Paul Bloxham said demand from the expanding middle classes in Asia was expected to keep supporting New Zealand's exports, though the risk that the European debt crisis hit Asia had increased.
The trade figures were still supporting economic growth in New Zealand, with exports being a stronger driver of growth than in the past.
BNZ said New Zealand's key trade shock absorber, a floating currency, was also working. The kiwi had fallen 10 per cent in the past month, to around US74c, and was off 16 per cent from its peak in August, it said.
